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China's Bear Market

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May 16, 2010 – Comments (9)

I have seen a number of articles on China's housing bubble, over building and certainly they had huge government works projects for their Olympics.  Safehaven had an article about their stock market being down 25% from peak

The article makes a point that this isn't going to be any more self contained then the housing bubble was self contained.

9 Comments – Post Your Own

#1) On May 16, 2010 at 11:56 AM, Teacherman1 (57.98) wrote:

Dang, that is a really depressing article.

I guess if your goal is "preservation of capital", rather than "increasing capital", they are a good site to follow.

Based on what that article said, it looks to me like there might be some similarities  to the U.S.market on March 9, 2009. Could that possibly mean there might be some similar opportunities?

Just as markets don't always go up, I don't believe they always go down either. I have seen a lot of ups and downs in my lifetime, and have been in and out of the market at times: I have also seen that in times of "change", there are opportunities to "increase capital".

Personally, I don't invest money that I can't afford to lose, but I know some do, so your "heads up" is timely.

Thanks for the post. 

JMO and worth exactly what I am charging for it. 

Have a good Sunday. 

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#2) On May 16, 2010 at 3:17 PM, 1315623493 wrote:

The US stock market will be facing substantial downward pressure over the next 2 quarters. Do not expect that we will ride this out apart from Europe and China. I don't get why many of these pundits think the US will be immune from adverse conditions in the international financial markets. 

This is what we've got...

1) Dollar at its 52 week high

2) European debt crisis

3) Chinese bear market

4) VIX in the top quartile of its 52 week range.

5) Commodities falling like a rock.

Don't think for a second the USA will ride high despite all this. The bull market of 2009, I think, is over. We're going to have a double dip recession. 

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#3) On May 16, 2010 at 3:31 PM, Frogtree71 (< 20) wrote:

Theres substantial downward pressure to stop it contuning up at the fast pace, I agree...but not to make it go down.  We will consolidate / go sideways, even go slowly up for a while...however, we will be at DOW 12,500 before year end.  I am personally buying now rather than at DOW 12,500 and above..

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#4) On May 16, 2010 at 5:31 PM, dwot (72.07) wrote:

Teacherman1,

 I lost big in the 2000 crash.  I wasn't actively watching investments and they hobbled along and in roughly 6 years I almost had made back what I'd lost.  I also had pretty big disasters in the housing market early.  The result was basically living most of my adult life with huge financial pressure.

I am comfortable now.  3 years ago I was thinking I was going to be 60 before my home was paid for and that was with having a modest lifestyle for spending.  Today I have a home paid for that gives me rental income.  Right now I am spending a fortune on home renovations and maintenance, but the roof was done a couple years ago, I am doing new windows, new furnace, so all the big  home maintenance is looked after and it should be minimal the rest of my time here.

I have retirement savings and a job that gives a pension. 

I am in a good place and see no reason to take what I see as huge risks.

Having said that, I am concerned about what happens longer term with the levels of debt out there.  It does seem at some point debt and saving are devalued to "fix" this mess and it also seems that some of those seeds have already been planted.

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#5) On May 16, 2010 at 5:45 PM, starbucks4ever (97.39) wrote:

I've been telling people for months now that Chinese stocks are worthless. Finally, the market is beginning to come to the same point of view, but this process still takes time. People are saying "Gee, perhaps a PE of 40 IS too much for BIDU", but they don't realize yet that this both P and E are going to ZERO. They are still thinking in terms of buying the dip, and that dip will just keep getting deeper and deeper.

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#6) On May 16, 2010 at 7:34 PM, Teacherman1 (57.98) wrote:

dwot

Glad you now have your life going the way you want. You have chosen the way that works for you, and that is what we should all do.

I got out of the market before the "dot.com" bust. I was watching all of the craziness and told my wife, the next thing we would see was some wall street banker hear his kid sneeze, and decide to do an IPO for Achoo.com

I then went back into real estate in time to profit from the bad decisions that others had made. I was able to pick up properties for as little as 40-50 cents on the dollar, which I then flipped to investors from California who couldn't believe how cheap our prices were in Texas.

I did the same thing in the late 80's with properties belonging to bankrupt reits. I was able to get those at 20-30 cents on the dollar.

I tend to do my investing when there are special situations occuring; whether in the market or in real estate.

I have been a member of Motley Fool since 2001, when I started to pick up bargins on stocks that had been killed along with the "dot.coms", but didn't deserve to be.

I didn't get greedy, and after a while, got back out.

Played in the Market a little in 2008, but didn't get back in heavy.

I made my first picks in CAPS in Jan of 2009, when I got back into the market seriously. Another special situation.

As you mentioned, there are still a lot of long term problems to fix, and it will be hard to find a safe place on the sidelines, at least for most people.

Being in the second half of my 7th decade of life, the "long term" is not as scary for me as for many. My kids are grown and have all done exceedingly well with their lifes. 

One key tenet I have learned over my relatively long life that has helped me to stay balanced, is "Stay flexible and don't over extend".   

Hope you are enjoying your lifestyle and your life.

Good luck with whatever you choose to do.

 

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#7) On May 16, 2010 at 10:20 PM, JaysRage (88.79) wrote:

It's an interesting scenario.   I'm certainly not worried about a head and shoulders chart for an entire country's economy, but there are valid and interesting problems with China right now.    Certain portions of the real estate market are overbuilt.   Even if the worst of what is reported is true, the government can keep propping it up for quite some time.   There is not an immediate threat, and if a crash is pending the government isn't going to drive their country under by pulling the rug out from the credit.    There is inflation beginning to creap it's way in, but as noted above, I think the Chinese government is willing to let that happen to a certain extent.   Europe is definitely an issue.   They kicked the can down the road a little bit, so it should have an immediate crash cause/effect, but it certainly is a warning shot.  

China's own economy is growing quickly internally, causing increased demand for food and technology products.   There is a huge coal shortage in the country right now, causing a nice short-term opportunity for coal companies to prosper. 

I think it's funny that China is being pointed to as the most likely to fall.   Geez, I think the U.S. is still worse off than China right now.  

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#8) On May 17, 2010 at 2:14 AM, 1315623493 wrote:

#3, the Dow is going to reach the 9000 range before 12,500. I'm highly skeptical of the Dow reaching that high this year. We shall see 7 months from now.

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#9) On May 19, 2010 at 11:57 PM, FleaBagger (29.66) wrote:

BIDU and the whole SSEC going to zero? Do you think that might be an exaggeration?

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